Georgia economy defies Fed rate-hike campaign

Job growth continues, but October labor numbers show signs of a coming change

They have raised pay for wage workers, added incentives for salespeople and found themselves ghosted by job candidates in a market where good employees are hard to find and keep.

But Georgia Furniture Mart still needs more workers for its 36-year-old, $51 million-a-year business, a locally owned, 160-employee operation that runs 14 trucks that make up to 120 deliveries a day, according to Justin Padden, the company’s director of sales and training.

“We are always hiring,” he said. “Right now, with this labor pool, we try to talk to everyone and anyone we can.”

The Norcross-based company illustrates the defiance of the Georgia economy, growing steadily this year despite higher interest rates, inflation and looming fears of recession.

The state last month added 3,700 jobs, giving Georgia 163,900 more jobs than when the year began — stronger than any parallel, pre-pandemic stretch, Labor Commissioner Mark Butler said Thursday. “The rate of job creation still far exceeds those in the workforce looking for employment.”

The state lists more than 165,000 open positions on its jobs site online, with the most listings in health care, retail and hospitality, Butler said.

But the Federal Reserve — the nation’s central bank — has continued its rate-hike campaign, aiming to tame inflation by making borrowing ever-more expensive, and the Fed is expected to eventually get its way. Thus far, higher rates have tanked the housing market and while job growth has been steady, there are signs that a broader turning point is coming.

While monthly data can be erratic, they can often offer clues to the economy’s trajectory. October’s job growth was slightly smaller than the average expansion in October. Meanwhile, the unemployment rate ticked up to 2.9% from 2.8% in September, but is near historic lows.

“We are starting to see some churn in the employment numbers with some isolated layoff events,” Butler said.

The rise in the jobless rate would have been larger, but official unemployment only counts those actively seeking work; the number of Georgians in the labor force dropped during the month. That 5,573 decline in the work force was the fourth-largest drop on record.

The labor force usually grows in October as seasonal hiring draws more people into jobs. And the labor force has been expanding since the worst of the pandemic shutdowns, but the pace of growth has been slower than before 2020 for a number of reasons, including the impact of COVID-19 on workers, the need for many people to care for family members, slower immigration and the retirement of boomers.

That has meant something of a labor shortage as employers struggle to find the workers they need, which has meant higher wages — one of the trends the Fed is trying to quash. But as long as spending stays strong, employers need workers and they’ll often pay more to get them.

Average pay last month was rising at 6.4% — and for workers switching jobs, it climbed at a 7.6% pace, according to the Federal Reserve Bank of Atlanta.

“You drive by a Wendy’s and they’ve got a sign that says $15 an hour and you just say, ‘What?’” said Padden, of Georgia Furniture Mart. “We had to go from $13 to $15 with some jobs and from $15 to $18 with others.”

Even his higher-paid sales staff got a bump in commissions, he said.

Fed officials have signaled a determination to keep ratcheting interest rates higher, but meanwhile, the Georgia economy keeps stubbornly growing. Among recent jobs announcements:

-- A parts supplier for Hyundai Motor Group plans to add 630 jobs near Savannah.

-- Archer Aviation Inc. will add 1,000 jobs over the next decade at a factory in Newton County.

-- Beretta Holding S.A. will add 600 jobs in a factory making high-end ammunition in Bryan County.

-- Wolf Home Products, which makes bath and kitchen cabinets, will add 20 jobs in Gwinnett County.

-- Komar Brands, a global apparel company, plans to add 294 new jobs in Bryan County.

-- Freyr Battery plans to add 723 jobs over the next seven years at a Coweta County factory.

“We are constantly hiring,” said Jun Lee, owner of Paris Baguette near Perimeter Mall. “And we are expanding, building two more stores in Suwanee and Buford.”

The bakery pays between $15 and $20 an hour for most jobs, [sandwich-makers, cakers and retailers] he said. “I am definitely worried about the economy because of what you see on the news. It’s not looking too good, but it’s not impacting my business.”

Georgia job growth, October

Jobs added: 3,700

Unemployment rate: 2.9%

Labor force: down 5,573

Sectors adding the most jobs: Entertainment, finance, local government and health care

October comparisons

Average job growth, pre-pandemic: 4,300

October job growth, 2022: 3,700

Average labor force growth, pre-pandemic: 4,471

October labor force, 2022: down 5,573

Sources: Georgia Department of Labor, Bureau of Labor Statistics